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Appeals court hears dispute over Rule 68 offer acceptance and whether $150,000 judgment included prejudgment interest
Summary
Ernst v. Baker centers on whether an accepted Rule 68 offer of judgment that specified a total $150,000 but was silent on interest includes prejudgment interest, and whether a severed insurer/homeowner's claim was effectively included. Appellants cite contract ambiguity; appellees argue the judgment necessarily includes statutorily mandated interest. The court reserved decision.
Jeremy Kaye (for the plaintiffs/appellants) told the panel that an accepted offer of judgment produced an unusual procedural question because court software and entry practices lacked a workflow for judgments resulting from an accepted offer.
Kaye said the offer repeatedly set a "total judgment" of $150,000 but was silent about prejudgment interest; counsel argued that silence created ambiguity under contract principles and that his clients reasonably understood the offer to exclude prejudgment interest. "The software didn't have any button to push to generate a judgment, that was resulting from an accepted, offer of judgment," Kaye explained, describing the mechanical and interpretive issues that led to the present dispute.
Appellees, represented by Andrew Labbe, urged a straightforward contractual reading: where the offer states the total judgment to be paid, the legally required components of a judgment (including statutory prejudgment or postjudgment interest) are subsumed. Labbe told the court that if the offer preserved interest issues, any postjudgment interest would run from the date judgment was entered (he identified that date in briefing as 04/01/2025). The trial court had denied ambiguity and entered judgment; appellees asked affirmance.
Argument also addressed whether the insurer's severed and stayed claims should be read into the offer and how Rule 68 mechanics operate when some defendants or claims are severed. Counsel acknowledged limited precedent in the court's docket on some Rule 68 subtleties and the bench noted the novelty of several issues presented.
The court took the matter under advisement at the close of argument.
